COMPANY?

•COMPANY AND OTHER

FORMS OF BUSINESS
ORGANISATIONS
COMPANY?
• The Indian Companies Act 2013 section 2(20)defines a
company as "a company formed and registered under this act
or under other previous company law".
• This is not a comprehensive definition A more popular
definition is the one given by theLord Justice Lindley.
• According to him a company is "an association of many
persons who contribute money or money's worth to a common
stock and employed it in some trade or business and who
share the profit or loss arising there from.
• The common stock so contributed is denoted in money and is
the capital of the company.
• The persons who contributed it or ti whom it belongs are
members The portion of capital to which each member is
entitled is his share The shares are always transferable
although the right to transfer them may be restricted".
WHAT IS A BUSINESS
ORGANISATION?

The term "business organization" refers to

how a business is structured.
It refers to a commercial or industrial
enterprise and the people who constitute it.
TYPES OF BUSINESS
ORGANISATIONS
Sole Proprietorship
Joint Hindu Family Business
Partnership Firm
Joint Stock Company
1.) Private Limited
2.) Public Limited
Co-operative Society
SOLE PROPRIETERSHIP
When the ownership and management of
a business are in control of one individual
the form of business is called sole
proprietorship.
 CHARACTERISTICS
The business enterprise is
owned by one single
individual (i.e. both profit
and risk belong to him)
Owner is the Manager
Owner is the only source of
Capital
The proprietor and
business enterprise are
same in the eyes of the
ADVANTAGES
OF
SOLE
PROPREITORS
HIP
Easy formation
Better Control (Prompt decision making
and Flexibility in Operations)
Subject to fewer regulations
Not subject to corporate income tax
Ownership of all profits
 DISADVANTAGES OF SOLE
PROPREITORSHIP
Owner has
unlimited liability
Difficult to raise
capital
Business has a
limited life
Difficult to do
business beyond a
certain size
 JOINT HINDU FAMILY BUSINESS
Comes into existence as
per the Hindu
Inheritance Act of India
This form of business
found only in India
All members of the Hindu
Undivided Family(HUF)
own the business jointly
The affairs of the
business are managed by
head of the family called
“Karta”. All other
members are called “Co-
parceners”
Membership is restricted only
to members of the Joint
family. No outsider can
become the member
Karta has unlimited liability
while all other members have
limited liability
The share of each member
keeps on fluctuating
Business continues to exist
upon the death of any
member or Karta.
 ADVANTAGES OF HUFs
Every co-parsener has an
assured share in profits
The business has continued
existence
Decision making is quick as
the powers are with the Karta
No corporate tax
People use it mostly for tax
benefits these days
DISADVANTAGES OF HUFs
Absolute power in the
hands of Karta.
Instability
Limited Resources can be
raised
Scope for conflict
PARTNERSHIP FIRM
A Partnership consists of two or more
individuals in business together
CHARACTERISITCS OF
PARTNERSHIP
Minimum 2 number of partners and maximum
20 partners
The relation between the partners is created
in the form of a contract. Written contract is
called “Partnership Deed”
The firm means partners, the partners mean
the firm
The profit is divided in any as ratio as agreed
No partner can sell/transfer his interest in the
firm to anyone without the consent of other
partners
ADVANTAGES OF PARTNERSHIP
Easy Formation
Larger Resources
Sharing Of Risk
Better Management and
Flexibility of Operation
No corporate income tax
Subject to fewer
regulations as compared
to companies
DISADVANTAGES OF
PARTNERSHIPS

Unlimited
Liability
Limited Life
Difficult to raise
capital
Chances of
Dispute
JOINT STOCK COMPANY
A joint stock company is a
voluntary association of
people who contribute money
to carry on business
CHARACTERISTICS OF A
CORPORATION
It is considered as a separate legal entity
It comes into formation after all formalities
under the Indian Companies Act 1956 are
completed
Management and ownership is completely
separate
Capital is raised through shares which are
transferable
ADVANTAGES OF A
CORPORATION
Limited liability of the
shareholders/promoter
Can easily raise capital
Have unlimited life
Ease of transfer of ownership
DISADVANTAGES OF A
CORPORATION
Formation is not easy
Excessive Government Regulation
Subject to Corporate Tax and
Dividend Tax (Double Taxation)
Delay in Policy
Decisions
Control by a Group
TWO TYPES OF CORPORATIONS
1. PRIVATE COMPANY
 Closely held by a few people
 Minimum 2 and maximum
200 shareholders
 Stocks cannot be traded on
exchanges and private equity
cannot be raised
 Less regulations as compared
to Public Companies
2. PUBLIC COMPANY
Stocks are held by a
large number of
people
Minimum 7
shareholders and no
limit for maximum
Can be listed on stock
exchange and can go
public
Have to follow many
laws with regards to
the board composition
CO-OPERATIVE SOCIETY

It is a
voluntary
association of
people or
business to
achieve a an
economic goal
with a social
perspective
CHARECTERISTICS OF CO-OPERATIVE

Voluntary association
Minimum membership requirement is
10 and there is no maximum limit
Registration of Co-operative is must
under the “Co-operative Societies
Act” is a must. After the registration
it enjoys certain privileges of a Joint
Stock Company
ADVANTAGES OF CO-
OPERATIVE
Easy Formation
Limited Liability
Stability
Democratic
Management
State Assistance
DISADVANTAGES OF A CO-
OPERATIVE
Possibility of
conflict
Long decision
making
process
Not enough
capital